Line upgrades hiking electricity costs

Albertans can expect a few more years of rising electricity costs during the provincial phase-out of coal-fired electricity in favour of renewables and natural gas.

But those increases will be coming from infrastructure projects greenlit by the previous government, and not the cost of electricity itself.

David Gray, President of Gray Economics, spoke Thursday at the Southern Alberta Council on Public Affairs on the future of the Alberta electricity market with regards to pricing as the province moves forward with replacing coal-fired electricity generation with renewables and gas.

He said the question most people want to know is if the province will be like Ontario.

“Is it going to be a disaster?” He asked. “My answer is no. It probably won’t be.”

The biggest challenge in Alberta with regards to electricity is the cost of absorbing new transmission lines which were commissioned by the PCs that are now entering service.

“They are a huge multi-billion dollar expenditure that we are having to pay for at the same time demand has dropped – or at least, is not growing the way it did – and when you put those two things together, it actually adds up to a substantial increase to people’s wire charges.

“The wire charges are sometimes actually higher than their energy charges. That’s because our energy charges at the moment are historically low – lower than is really sustainable.”

Gray called the decision to green light massive transmission line upgrades a mistake by the Progressive Conservatives in Alberta.

“They gave carte blanche to $15 billion worth of new transmission lines, where as previously we had $1 billion worth. That’s the biggest thing hitting people’s bills at the moment.”

Albertans can expect continued fallout from that decision for several more years.

Gray said while the opportunities for energy efficiency are getting better all the time, the province really needs to find a use for these line upgrades.

“My suggestion is that we look at a partnership with B.C. and perhaps the federal government to create a much larger interconnection between B.C. and Alberta, and allowing us to produce a lot more wind power than we could just on our own with a goal of being a green energy superpower and selling to California and the western U.S. as they electrify their vehicle fleet.”

He said another energy cost many overlook are franchise fees set by municipal governments. He said it is those local municipalities setting the franchise fee rates who are partly responsible for driving up energy costs.

“Having said that, those fees have been relatively stable and people haven’t been jacking them up,” he said. “But some of them are still quite high.”